News

QLogic to Cut Workforce as Part of Restructuring Efforts

QLogic Corp. (QLGC) said Tuesday morning that it is implementing a restructuring plan to streamline operations to try and improve long-term profitable growth. The plan includes laying-off employees, consolidating engineering activities and enhanced product development focus. No specifics on how many of the maker of networking products’ 1,230 employees will be sent to the unemployment line were discussed in a corporate statement today.

The news comes the day after social game maker Zynga (ZNGA) announced it was cutting its staff by 520 workers as part of restructuring efforts.

Aliso Viejo, California-based QLogic expects the restructuring moves to happen over the next year and will return an annualized cash savings of about $20 million, mostly in operating expenses. The company said that a portion of the savings will go into developing new products and programs.

QLogic anticipates a pre-tax GAAP charge in the range of $20 million to $23 million for the restructuring efforts. The majority of the charges are forecast for the second half of the fiscal year. The new fiscal year 2014 started April 1.

This news comes on the heels of a May 17 announcement of the immediate resignation of president, chief executive and director Simon Biddiscombe. Biddiscombe had held the top executive position for five years. CFO Hu was appointed the interim CEO position at that time while the company searches for a permanent replacement.

The company has been hurt by soft growth in its host and silicon product categories. In May, the company reported fiscal 2013 sales of $484.5 million, down 13.3 percent from $558.6 million in fiscal 2012. Sales of host products, the largest contributor to revenue, slid 14 percent from $429.82 million in fiscal 2012 to $369.92 million in fiscal 2013. Adjusted income from continuing operations for the full year was $76.1 million, or 81 cents per share, compared to $142.3 million, or $1.39 per share, a year earlier.

QLogic has forecast Q1 revenue in the range of $110 million to $116 million and earnings per share between 11 cents and 16 cents for the quarter.

Shares of QLGC are advancing with the restructuring news, rising about 1.4 percent in early Tuesday trading to near $10 per share. Across 2013, shares are up by about 3 percent, although well down from highs over $12 hit earlier in the year.

DISCLOSURE:
The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer